- Novogratz expects a stake in US ETH ETFs to occur in two years.
- However, regulatory and Ethereum concentration risks still exist for staking ETH ETFs.
Galaxy Digital’s Mike Novogratz claimed he was looking for an American spot Ethereum [ETH] ETFs will eventually exist, despite the SEC’s current position.
In a interview On the sidelines of the 2024 Consensus, Novogratz claimed that “you’d rather get a return than no return.” When asked when this would happen to the US spot Ethereum ETFs, Novogratz said:
“I would argue that within 12 to 24 months of the ETH ETFs going unstaked, they will change the rules and allow staking.”
Bloomberg ETF analyst Eric Balchunas estimated the approval of registration statements (S-1s) and the effective launch of the spot ETH ETF products by June or July. If so, Novogratz’s deployment projection would be around mid-2025 or mid-2026.
The stakes and risks of SEC
The US SEC has always been against crypto staking. Last year, Kraken settled with the agency for $30 million and shut down its U.S. deployment operation.
Additionally, potential US Ethereum ETF issuers dropped previous “staking provisions” on the 19b-4s forms before the SEC approved them on May 23. That indicated that the “cease and desist” provisions could have been compliance hurdles to the approvals.
Additionally, there are concerns that deploying ETH ETFs in the US could increase the centralization risks of the Ethereum network.
This is reported by S&P Global report, ETH ETF strike can be positive and negative. On the plus side, S&P Global noted:
“The participation of institutional custodians could reduce the current concentration on the decentralized staking platform Lido”
Despite losing some of its market share to the staking of ETH, Lido still remains active dominated the market with 28%, followed by Coinbase with 13% and Ether.Fi with 3% among the top three leaders.
On the negative side, S&P Global warned that:
“It could also introduce new concentration risk, especially if a single entity is chosen to stake the majority of the ETH in these ETFs.”
According to a recent Bloomberg reportHong Kong was planning to approve the spot ETH ETF stake.
While there was no official timeline for the plan, market watchers believe it could boost demand for Hong Kong’s spot ETH ETFs, despite their tepid debut in late April.
It remains to be seen whether the US regulator will follow Hong Kong’s lead and make a U-turn on staking and its potential impact on the security of the Ethereum network.